NJ Affordable Homes Corp. and Wayne Puff

On September 12, 2005, the SEC obtained a temporary restraining order that, among other things, froze all of the assets of NJ Affordable Homes Corp. and Wayne Puff and appointed a temporary Receiver over the assets of NJ Affordable. The SEC alleged that from at least 1999 to the present, the defendants sold, in unregistered offerings, at least $40 million in notes to more than 490 investors located throughout the United States in connection with their participation in a Ponzi scheme.

In selling the notes, the SEC alleged the defendants made materially misleading misrepresentations and omissions concerning the investment risk and nature of NJ Affordable's business. Specifically, the SEC claimed the defendants guaranteed investors high rates of return (between 15% and 20%) based on promises that investor funds would be used to fund the purchase, renovation, and resale of real property. The SEC alleged the defendants did not disclose that they could not pay such high rates of return and that payments to existing investors were made from funds from new investors. For more information about the SEC's action, you can read Litigation Release Nos. 19372, 19377, and 19408.

The Court appointed the Honorable Nicholas H. Politan as temporary Receiver. On November 17, 2005, the Court approved the Receiver's Report of October 31, 2005, and authorized the Receiver to file a petition under the Bankruptcy Code on behalf of NJ Affordable Homes Corp.

On November 22, 2005, the Receiver filed a voluntary petition for relief under Chapter 7 of the Bankruptcy Code. The Bankruptcy Case for the debtor NJ Affordable Homes Corp. is pending in the United States Bankruptcy Court for the District of New Jersey (Case No. 05-60442). You can obtain further information regarding the bankruptcy case by contacting the offices of the Chapter 7 Trustee, Charles Forman, at:

http://www.sec.gov/divisions/enforce/claims/njaffordable.htm